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New research from Hacken System’s Crypto Exchange Ranks (CER) shows that traditional banks like JPMorgan and Bank of America dwarf the nascent cryptocurrency exchange industry.

Uptown Top Ranking

Cryptocurrency exchanges are like the banks of the industry, acting as intermediaries between traders, investors, projects and other stakeholders. But the metric used to compare exchanges (daily trade volumes) is open to abuse and manipulation. New research from Hacken System’s Crypto Exchange Ranks (CER) suggests a more accurate ranking method.

In the rampant bull market of 2017, crypto exchanges appeared to have developed into significant players in global finance. Billions of dollars of daily traded volume fuelled investors confidence that they had bought into something huge. But centralized crypto exchanges display the polar opposite of the transparency that we hold so dear in Bitcoin.

These impenetrable black boxes of power, completely conceal the way they operate, store customer assets, and make profit. The preferred method for ranking exchanges became the (often self-reported) daily trade volumes, which poses obvious issues.

Techniques such as wash-trading allow exchanges to manipulate this metric, enabling unproven new exchanges to emerge at the top of the CoinMarketCap rankings. So how can we grade the exchanges’ genuine sustainability and liquidity?

All Aboard, The Blockchain

The solution, according to Hacken, is in the blockchain itself. As an immutable ledger we can rely on the information recorded.

Therefore, the only trustworthy data about the exchanges available now resides in their cold and hot wallet balances. This information may not be falsified and can be easily verified. Likewise, anyone can observe the wallets of a particular exchange and track all their changes and movements.

This also compares to client deposits in traditional banks, reflecting the level of liabilities for each. Despite the billions of dollars in reported trade volumes, exchanges fall far behind banks when considering this metric.

Don’t Believe The Hype

Hacken compared data from the five largest US and UK banks, five local banks in emerging countries, and the five largest crypto-exchanges (according to wallet balances).

The wallet balances of the exchanges are not even visible in the chart compared to the top five US and UK banks. Even taking these banks out of the equation, and just considering the five local banks in emerging nations paints a sobering picture.

On average the crypto-trading platforms lag behind local bank deposits by a factor of 15. And their wallet balances hold over 1000 times less than the top five global banks.

These figures may look depressing compared to the billion dollar volumes we have been fed in the past. But for cryptocurrencies to grow (and there is still a lot of that needed to achieve a truly global scale), it is important to have accurate data to rely on.

Perhaps now we can put the hype behind us, and concentrate on the measured and sustainable growth of the industry.

Binance, the world’s largest cryptocurrency trading exchange by volume, announced today that both debit and credit card payments for cryptocurrencies are now open — thanks to a partnership with Simplex, a fully-licensed financial institution that offers online fraud-protected payment processing solutions.

Facilitating Mainstream Adoption

The move comes as part of Binance’s long-term goal or increasing both the adoption and accessibility of cryptocurrencies for the wider public. Explained Binance CEO Changpeng Zhao:

We want to provide Binance traders with fast and easy access to crypto, in the most secure way possible. Partnering with Simplex allows us to instantly bridge the gap between credit card payments and crypto for traders globally. On Binance.com, you can now buy crypto with credit cards and start trading in minutes.

Likewise, Simplex CEO and cofounder Nimrod Lehavi stated:

Easy and fast credit card payments, for mainstream users, is a key factor in wider adoption of crypto in general. We’re thrilled to partner up with Binance and together enable a much better, fast and easy experience.

It should be noted that purchasing cryptocurrencies through Binance via Simplex is subject to local bank policies.

Continual Development

Binance’s partnership with Simplex comes shortly after the world’s leading exchange launched support for euro and British pound sterling trading via Binance.je and Ugandan shillings trading via Binance Uganda.

Zhao sees the construction of fiat gateways as critical to facilitating mainstream adoption of cryptocurrencies and cryptocurrency trading, stating:

The crypto industry is still in its early stages and most of the world’s money is still in fiat. Building fiat gateways is what we need now to grow the ecosystem, increase adoption and introduce crypto to more users.

What do you think about the partnership between Binance and Simplex to allow debit and credit card payments on the platform? Let us know in the comments below!

Changpeng Zhao, CEO at Binance – the world’s largest cryptocurrency exchange by means of traded volumes, has confirmed the allegations, reassuring that they’ve already frozen some of the funds.

Zhao commented:

Just checked, we were able to freeze some of the funds. I don’t understand why the hackers keep sending to Binance. Social media will be pretty fast to report it, and we will freeze it. It’s a high-risk maneuver for them.

Just checked, we were able to freeze some of the funds. I don't understand why the hackers keep sending to Binance. Social media will be pretty fast to report it, and we will freeze it. It's a high risk maneuver for them. https://t.co/i0PeahLzic

Bitcoinist reported yesterday that Cryptopia’s security has been breached, resulting in ‘significant losses’. Police in New Zealand also confirmed.

Binance Caught in the Fire

Zhao’s tweet caused a reaction in crypto Twitter’s community as one user (@Crypto_Bitlord) expressed his bewilderment that Zhao referred to “social media” as a means of reporting rather than Binance’s own surveillance systems.

It’s quite easy to generate a brand new address. We (and no one) recognize every transaction out there. We already have very in-depth and detailed blockchain analysis.

Yet, the question remains – if a regular Twitter user has been able to detect the transaction in question, how, and more importantly – why did Binance miss it?

Perhaps the better question, as posed by @Crypto_Bitlord is:

So you are saying criminals can steal funds and just create a brand new address to send to before binance?

In the meantime, Binance announced today the launch of their Binance Jersey fiat exchange. The platform is aimed at traders from Europe and it offers BTC/GBP, ETH/GBP, BTC/EUR, and ETH/EUR trading pairs.

What do you think of Binance missing the transactions in question? Don’t hesitate to let us know in the comments below!